Recently, the epidemic has begun to spread globally, and the number of confirmed cases in Japan and South Korea has surged. As of February 28, Japan has reported a total of 919 cases of new coronary pneumonia, and South Korea has confirmed a total of 2022 cases.
Affected by the epidemics in Japan and South Korea, the global economy seems to be overcast. Since February 24, U.S. stocks have begun to plummet, and chips, technology and other sectors have experienced sharp fluctuations. It affects the whole body, Japan and South Korea are in an important position in the semiconductor industry chain, causing the global semiconductor industry chain to face a huge test.
Japan is second to none in the field of semiconductor materials and equipment, and South Korea is a major producer of memory and Display panels. If the epidemic in Japan and South Korea continues to spread and the production capacity of the electronics industry in Japan and South Korea is damaged, the global semiconductor industry is likely to experience huge shocks. Some people in the industry believe that the epidemic in Japan and South Korea may accelerate the process of upstream penetration of China’s semiconductor industry. Is this really the case?
Semiconductor materials are difficult to replace in the short term
The semiconductor production process is divided into three major links: design, manufacturing, and packaging and testing, and semiconductor equipment and materials are inseparable from the two links of manufacturing and packaging and testing. Among them, the material industry is the beginning of ensuring the smooth production of chips.
The entire semiconductor field requires a total of 19 key materials, 14 of which come from Japan, and Japanese companies control more than 50% of the world’s material production capacity. Once the Japanese epidemic causes production capacity damage, China and the global semiconductor industry chain will usher in a crisis.
Crisis is an opportunity. Can China Semiconductor Materials take this opportunity to expand its market share? But in fact, it’s not.
The technical barriers of the semiconductor materials industry are very high, and participants in each segment have created a moat. Compared with the high-end players in the industry, Chinese companies started late and have insufficient long-term R&D and market accumulation. Chinese semiconductor material companies are far from them.
At the same time, the overall self-sufficiency rate of China’s semiconductor materials is not high, and wafer manufacturing materials are mainly imported, but the localized substitution of packaging materials with lower technical barriers is doing well.
However, from the perspective of the market size of semiconductor materials, large silicon wafers have the largest market size and occupy an important position in the semiconductor industry chain. Therefore, if China wants to realize domestic substitution, it is imperative to develop the large silicon wafer industry.
Currently, the global silicon wafer market is monopolized by Japan, the United States, South Korea and other countries, and it is difficult for China to enter the high-end market. Japan’s Shin-Etsu Chemical’s market share is 28%, Japan’s SUMCO’s share is 25%, Taiwan’s global wafer share is 17%, Germany’s Siltronic’s share is 15%, and South Korea’s LG’s share is 9%. These five manufacturers together accounted for 94% of the global market share, and Japan accounted for 53% of the market share.
At present, although Chinese manufacturers have a certain gap with international giants, they have made certain achievements in domestic substitution. Silicon wafers below 6 inches can basically be replaced by domestic products, and 8-inch wafers can be shipped in small quantities. The domestic 8-inch wafer manufacturers only have a few manufacturers such as Yanxin Materials and Jin Ruihong, but they are far from satisfying the domestic market. The 12-inch silicon wafers are basically imported.
From the demand side, 12-inch silicon wafers are mainstream products, and the market demand is increasing. From 2018 to 2020, there will be a total of 25 new wafer manufacturing production lines worldwide, of which 11 are 12-inch and above production lines; mainland Chinese semiconductor manufacturers have added 49 production lines, of which 25 are 12-inch production lines .
For this reason, Chinese material manufacturers must increase the production capacity of 12-inch silicon wafers as soon as possible in order to catch up with the international giants. It is understood that the three materials companies of Zhonghuan, Super Silicon Semiconductor, and Silicon Industry are increasing their 12-inch production capacity.
Among them, on the evening of February 19, Zhonghuan issued an announcement stating that it planned to raise 5 billion yuan for the production line of 8-12-inch semiconductor wafers for integrated circuits. At present, the company’s downstream customers have verified smoothly, and the mass production of semiconductor 12-inch silicon wafers is expected to be further promoted.
Affected by the epidemic, the downstream demand for semiconductors will shrink in the short term; in the long term, downstream emerging technologies continue to develop, and the demand for large-size silicon wafers will still maintain a relatively high level of prosperity. When Japanese and Korean material manufacturers have not resumed production capacity, large-size silicon wafers are in short supply. Domestic semiconductor material manufacturers are expected to accelerate their domestic substitution, but it is very difficult to seize the market share of international giants.
The layout of domestic equipment is at the time
In the field of semiconductor equipment, Japan still has an absolute advantage. According to the ranking results of global semiconductor production equipment manufacturers released by the US semiconductor industry research company VLSI Research in 2018, Japanese manufacturers account for seven. Tokyo Electronics, one of the world’s top five equipment giants, is a Japanese company. Even in the most technically difficult field of lithography machines, Japan’s Nikon and Canon can grab a certain market share.
In today’s era, globalization has become a basic feature of economic development, and countries are closely related. Problems in the supply of semiconductor equipment in Japan will affect the global semiconductor industry chain. The reason behind the impact on the global industrial chain is that neither China nor other developed countries have a complete industrial chain to replace it.
Therefore, if the epidemic in Japan and South Korea is difficult to control, global industries will be affected. For China, the domestic semiconductor industry chain is still immature, especially in the field of semiconductor equipment, where domestic equipment companies are relatively small and have relatively single product lines. The best strategy for China to deal with the crisis is not to seize the market share of major international manufacturers, but to satisfy the needs of domestic manufacturers first.
Judging from the general background of the transfer of the semiconductor industry, global semiconductor production capacity is shifting to China, and Chinese equipment is likely to usher in strong growth. SEMI predicts that South Korea, China, and Taiwan will be the world’s top three equipment markets from 2019 to 2020, and China is expected to rise to the world’s largest equipment market in 2020.
2020 will be the year of the outbreak of domestic semiconductor equipment. The important reason is that mainland China is the world’s largest semiconductor consumer market, and the change in the focus of consumption affects the change in the center of global semiconductor production. On the one hand, foreign semiconductor companies have invested in China to build factories; on the other hand, as the wafer manufacturing technology of Chinese companies has gradually matured, local manufacturers have become the main force in the construction of fabs.
In addition, driven by national policies, mainland fabs are more willing to purchase domestic equipment, and domestic equipment manufacturers have the best opportunity for domestic substitution. Huawei’s semiconductor expert Gewen told Yiou Kechuang: “In the short term, the epidemic will hit consumer confidence. In the long run, the localization of China’s semiconductors will accelerate.”
As we all know, semiconductor equipment is mainly used in semiconductor manufacturing and packaging and testing processes. The core of wafer processing equipment is lithography, etching, and thin film deposition equipment), packaging equipment and testing equipment. Among them, wafer processing equipment has the most technical difficulty. .
At present, Chinese companies have made breakthroughs in etching equipment, thin film deposition equipment, cleaning equipment, testing equipment and other fields, and many outstanding companies have emerged in these fields. For example, North Huachuang is a semiconductor equipment “platform” enterprise with the widest product category coverage in China. Its business includes etching machines, thin film deposition equipment, and cleaning equipment; Changchuan Technology’s industrial chain is relatively complete, and its products cover crystals. Round manufacturing and packaging and testing are two major processes.
Due to the upsurge of domestically produced substitutions, domestic excellent equipment manufacturers have ushered in a turning point in their development. At the same time, the advanced process technology of local wafer manufacturers is becoming more mature, which also promotes the deployment of new generation products of domestic semiconductor equipment in advance. In this way, domestic semiconductor equipment manufacturers will have the opportunity to enter the international arena.
Japan’s semiconductor industry is mainly focused on the upstream of semiconductors. Both semiconductor materials and semiconductor equipment will have a profound impact on the global semiconductor industry chain. The technical barriers in these two areas are relatively high, and Chinese manufacturers still cannot surpass them in the short term. However, the epidemic may be the beginning of the reconstruction of the global semiconductor industry chain, and China’s role in the global semiconductor industry chain is expected to be rewritten accordingly.
Author: Zhang Jiwen